Activist shareholder urges NZME to break up its assets

Wednesday, 13 May 2020

NZ First leader Winston Peters last year announced his party's support for a major media merger.

Shareholders of media company NZME are being urged to vote for a break up of the company's assets and for a shift in focus towards new media opportunities.

Three resolutions have been put by individual shareholders to the company's annual meeting next month although the board has recommended shareholders reject them.

Howard Zingel, an activist member of the New Zealand Shareholders Association, asked that directors obtain the approval of shareholders before they proceed with any action costing more than $1 million, to acquire rival media organisation Stuff Limited.

Stuff owns the Stuff news site and the Dominion Post, Press and the Sunday Star-Times.

This week NZME, which has long courted Stuff, called on the Government to allow it to buy Stuff for $1, overturning a Commerce Commission ruling on media monopolies.

* NZX Regulation contacted NZME over Stuff takeover statement

* Media company NZME cuts workforce by 15%

* NZ Herald owner confirms closure of Radio Sport

The call prompted Stuff's Australian owner Nine to divulge that talks with NZME had ceased.

Zingel urged shareholders to direct NZME's board to put aside ''a sleep walking management style'' and speed up its plans.

''Do it now and do it quickly don’t be distracted, the new digital world even at this difficult time, is throwing up opportunities every day,' Zingel said.

NZME has focussed for too long on traditional media, one shareholder believes.

''The digital initiatives we do have, lack passion and urgency and imagination. Being bold isn’t an option, it is an imperative.

''Forget the newspapers; they are just the stepping stone to launch new business. Go fast and go hard. The newspaper people of yesteryear let the potential of TradeMe slip through their fingers.''

NZME has long proposed a merger with Stuff but was thwarted by the Commerce Commission over monopoly concerns.

Another shareholder Neil Parker called for greater emphasis on dividends and for the company to break up NZME, which owns print radio and digital businesses including the New Zealand Herald and Newstalk ZB.

A break-up would make management simpler and realise the commercial values of its masthead brands, freeing up direction for editorial assets which the existing structure and management were ''unable or unwilling to monetise''.

“For three years, shareholders have been hanging out for NZME’s digital and e-commerce initiatives to fire.

''The wide spread of media interests the company has proved a crippling impediment to getting the necessary tasks done in a timely fashion.''

Parker said the company needed to focus on profit to preserve its financial strength, and feared the business was being put at risk by other priorities.

The board said in reply that its chairman, Peter Cullinane, had its complete support and that the company's diversification was a strength.

''NZME does not believe that breaking up and selling NZME’s media interests piecemeal would achieve a return for NZME and its shareholders that fairly represents the value inherent in the NZME business.''

Regarding Zingel's motion, the board said shareholders had the right to vote on major decisions which might change the nature of the issuer in which they are invested.

''When entering into transactions, NZME will of course seek shareholder approval where it is required to do so.''

However, ''gaining shareholder approval for entry into a transaction where it is not strictly required lengthens the process significantly and can itself incur significant cost to the company ''.

''Seeking prior shareholder approval is therefore not always in the best interests of the company.''

NZME has also put in a fresh request to the Commerce Commission to allow it to purchase Stuff but the commission says the application could take some time.

A spokesperson said an application had been received but further information was required.

''We are unable to give an estimate of how long this application will take to process at this stage.''